GSMA has urged the governments to immediately suspend the collection of Universal Service Fund (USF). Because, the trade body has found that USF has failed to deliver what it promises in theory. After surveying 64 countries GSMA has detected that more than one-third of these governments have not even disbursed any fund they have taxed the consumers in the name of public interest. Such accumulated idle USF amounts to in excess of a whooping US$11 billion only. The study cites India, Cote D’Ivoire and Paraguay as bad examples:
In India, the Universal Service Obligation Fund (USOF) continues to impose approximately a five per cent levy on operator revenues, despite the fact that is contains over 4 billion USD of accumulated funds. India is not alone as regards the collection of substantial amounts of money from the mobile industry, for example in Cote D’Ivoire and Paraguay, the USF represents in excess of 0.6 per cent of the countries’ GDP.
And Pakistan is no longer the best example.
Of all the funds surveyed globally, Colombia offers an outstanding example of best practice in the administration of USFs. The Colombian authorities have recently restructured the USF approach to reduce the burden placed on operators. They have structured it to be financially autonomous, and money for projects is granted in a highly transparent manner via a public bidding process open to all interested parties. The research reinforces the fact that market-based solutions have shown themselves to be the most effective way in bridging the ‘digital divide’.
Key findings of the research are as follows:
- Out of the 64 funds surveyed, less than an eighth of them are achieving their targets;
- Funds are not always allocated in a competitively and technologically neutral way;
- There is no evidence that Universal Service Funds are an effective way to achieve universal service goals and in fact they may be counter-productive, as taxing commercial investors in such a way makes rural investments less likely; and
- Alternative solutions, for example private/public partnerships such as those established in Finland, have been able to deliver better and more effective outcomes.
Full report can be downloaded from here.
Comments are closed.